Report on the relative financial position and performance

Dear Finance Director,

I have done a research on the annual report, specifically on the financial

position of three companies in media sector. The three companies are Astro Malaysia
Holdings Berhad, Asia Media Group, and Berjaya Media Berhad. These three
companies are selected to perform a comprehensive ratio analysis for two years which
are 2018 and 2019.

Astro Malaysia Holdings Berhad which also called “Astro” is one of the
Malaysia’s leading consumer and content company in the TV, radio, commerce and
digital dimension. The company has served 23 million individuals in 5.7 million
households which is 77% of Malaysian households.

Asia Media Group is a broadcasting, advertising and digital media company in

Malaysia. The Largest Transit-TV Network in Malaysia is conduct by this company.
It provides advertising and entertainment services. The company is travelling in the
market-centric hubs of Klang Valley and Johor Bahru and had communicate to over
500,000 viewers daily.

The third company is Berjaya Media Berhad. It is an investment holding

company in Malaysia. The company has published the national newspaper called The
Sun which is broadly read by Malaysian. It is also involved in the publication,
printing and distribution of daily newspaper, magazines, and journals.

There are four categories of ratio analysis used to evaluate the performance of
companies in 2018 and 2019. There are asset management, capital structure,
profitability and liquidity. The first ratio in asset management is the asset turnover
ratio. This ratio is to measure whether the company has managed its asset efficiently
and effectively. For Astro Malaysia Holdings Berhad, it has a constant positive rate of
the ratio which is increase 0.04 times from 1.24 times (2018) to 1.28 times (2019).
This is because according to the annual report (2019), they enhancing their assets by
embracing cloud, analytics, and machine learning. Asia Media Group Berhad and
Berjaya Media Berhad have negative trend for this ratio, especially Berjaya Media
Berhad has -109.17 times. This may because overinvestment and the companies
prefer to purchase rather than lease. So, Astro Malaysia Holdings Berhad generates its
asset efficiently and utilised their fixed asset wisely.
The next ratio in asset management is total asset turnover ratio. It measures
how the company efficiently produce sales. Astro Malaysia Holdings Berhad and
Berjaya Media Berhad have increasing ratio while the ratio for Asia Media Group
Berhad decreases in 2019 when compared to 2018. High total asset turnover ratio
indicates that the company operates with fewer assets than competitors. The third
ratio is current asset turnover ratio. It measures a company’s ability to generate its
sales through its current assets. Overall, the three companies have increasing current
asset turnover, this indicates that the need of sources of finance decreases by the three
companies.

The second category of ratio analysis is capital structure. Capital structure is

the combination of equity and debt. It is to measure how well a company finance its
growth and operation. The first ratio in capital structure is Debt Ratio. Debt Ratio is
to measure the immensity of a company’s leverage. Debt Ratio for Astro Malaysia
Holdings Berhad and Asia Media Group Berhad decreases from 2018 to 2019 while
Berjaya Media Berhad’s debt ratio increases from 2018 to 2019. The higher the debt
ratio, the more leveraged and greater financial risk of a company is. Therefore, Asia
Media Group Berhad’s assets has meet all its liabilities when due sufficiently.

Next, Proprietary Ratio is the second ratio in capital structure. Proprietary

Ratio is the proportion of shareholders' equity to total assets. Astro Malaysia
Holdings Berhad and Berjaya Media Berhad have high Proprietary Ratio. This may
indicate that the companies’ equity is enough to support the functions of the
business. Asia Media Group Berhad has low Proprietary Ratio in 2018 and 2019.
This means that the company has many debts to support its business.

The third ratio is Working Capital to Total Assets Ratio. It measures the net
assets of a business of the total assets as a percentage. Astro Malaysia Holdings
Berhad has high Working Capital to Total Assets Ratio when compare to the other
two companies. High working capital to total assets ratio indicates that the company
has high liquidity and financial strength. Asia Media Group Berhad and Berjaya
Media Berhad have negative Working Capital to Assets Ratio because current assets
are
greater than current liabilities. The business may be in financial distress and does not
have enough liquid assets to cover its current liabilities.

In Profitability ratio, the Gross Profit Margin is to show how well a company
creates a product or provides a service compared to its competitors. Astro Malaysia
Holdings Berhad and Berjaya Media Berhad has high gross profit margin in 2018 but
slightly decrease in 2019. Asia Media Group hit 21.84% in 2018 and dropped to 0%
in 2019. A high gross profit margin suggests that the business is operating efficiently
and effectively. So, Astro Malaysia Holdings Berhad and Berjaya Media Berhad
operates well in 2018 when compared to 2019.

The second ratio in profitability is Net Profit Margin. It is to show how much
net income or profit is generated as a percentage of revenue. Having a high net profit
margin means that the company control its costs effectively. Astro Malaysia Holdings
Berhad has higher net profit margin than Asia Media Group and Berjaya Media
Berhad. This is because Astro Malaysia Holdings Berhad may be more efficient and
able to grab on new opportunities. Asia Media Group and Berjaya Media Berhad may
have used an ineffective cost structure or poor pricing strategies causing them to get
negative trend of net profit margin ratio in 2018 and 2019.

Thirdly, Return on Capital Employed is in the profitability. It measures

whether a company is generating profits from the capital. Return on Capital
Employed of Astro Malaysia Holdings Berhad hit 3.86% in 2018 and dropped to
0.88% in 2019. While Asia Media Group and Berjaya Media Berhad have
experienced increases in the Return on Capital Employed ratio. High ratio indicates
that may be because of the companies was doing well in terms of the return on
investment that was made by shareholders.

For the liquidity ratio, the first ratio is Acid Test. The acid test ratio is also
known as the quick ratio. It is to show whether the company has sufficient short-term
assets to cover its short-term liabilities. The three companies have decreasing acid test
ratio from 2018 to 2019. This shows that the companies do not use well the cash or
short-term assets and more liquid current position. This suggest that those companies
is leveraged, struggling to maintain sales or collecting receivables too slowly. It also
might because of the companies were not be able to meet their short-term debt
obligations.
 The next ratio is Current Ratio which is use to measure the ability of the
company to pay out its short-term liabilities with its current assets. Current ratio
decreased among the three companies may be because the companies have difficulty
on making current debt payments. The Astro Malaysia Holdings Berhad has the
highest current ratio when compared to Asia Media Group and Berjaya Media
Berhad. This shows that the resources of the company may not being fully utilised
and excess cash.
It also indicates that Astro Malaysia Holdings Berhad has less difficulty in converting
its non-cash assets to cash.

The last ratio is Trade Debtor Days in liquidity ratio. It is to measure how
fast the cash can be collected from debtors. The trade debtor day for Asia Media
Group is 0 because there are no trade debtors based on the financial report of the Asia
Media Group. Astro Malaysia Holdings Berhad and Berjaya Media Berhad have
decreasing trend from 2018 to 2019. This may show that there is less investment in
accounts receivable and therefore more cash is being made available for other
purposes.

In a nutshell, according to the analysis among these three companies, I can

conclude that Astro Malaysia Holdings Berhad have better performance over the two
years. This is because it has managed its asset effectively and efficiently. Also, it is
more efficient and able to grab on new business opportunities. Besides that, Astro
Malaysia Holdings Berhad has less difficulty in converting its non-cash assets to cash.
Therefore, the overall performance of Astro Malaysia Holdings Berhad is considered
to be good. I hope that this information would be useful for you.

Respectfully Submitted,

Financial Manager